The federal government in Ottawa is backing away from controversial tax changes As Finance Minister Bill Morneau addresses criticisms over his private business dealings.

Minister Morneau held a news conference in Ottawa Thursday afternoon to defend himself against charges that he breached federal ethics guidelines by failing to disclose his ownership of foreign property in France. The Finance Minister’s defence came just hours after the Liberal Government of Prime Minister Justin Trudeau backed away from controversial proposals to change the tax code that have drawn the ire of groups ranging from small business owners to doctors and farmers.

At a family farm in Erinsville, Ontario early on Thursday, Minister Morneau said the federal government is abandoning the proposed tax reform that would have restricted the conversion of income into capital gains, which proved wildly unpopular with business groups across Canada.

“We're going to take a step back and reconsider that aspect of our tax proposal,” said the Finance Minister.

The about face by Ottawa comes after a consultation process that lasted nearly two months and drew persistent criticism. The proposed tax reforms raised fears that they could add significant costs for some business owners who hope to keep certain types of businesses — such as farms — within their family.

Earlier this week, the government canceled another proposed measure that would have had a negative impact on the intergenerational transfer of family businesses. And, Minister Morneau announced days ago that he will scale back a proposal to crack down on passive investment income, which was one of the most contentious elements of the proposed tax amendments.

The reversals also come as the Finance Minister was forced to defend his personal conduct after it was revealed that he and his wife, Nancy McCain, own a villa in rural France that they rent out and earn income on through a foreign company that they control. Federal laws require all Members of Parliament to disclose property they own anywhere in the world.

On Thursday afternoon, Minister Morneau said he is placing his assets in a blind trust and divesting shares in his family-built company to calm the escalating political controversy over his business interests. At a news conference held on Parliament Hill, the Finance Minister said he will unload the million shares he still owns in Morneau Shepell, the human resources and pension management company that his father founded and where he worked before entering politics two years ago. Minister Morneau’s other assets will be placed in a blind trust in order to avoid any public perception of conflict of interest, he added.

During his remarks to the media, Minister Morneau conceded that the controversy over his business holdings had become a “distraction.”